Common Reasons Why House Sales Break Down
Top problems that might occur during the home buying process and what you can do to ensure your move stays on track.
52% of house sales fell through in the third quarter of 2020, due to the chaos of purchasing property during the pandemic. In a typical non-Covid year such as 2019, you could expect that figure to be nearer to 25% throughout England and Wales according to the Mortgage Finance Gazette. So, when aspirational buyers are set on finding their next dream property to live in, why are at least a quarter of those purchases falling through? And most importantly, is there anything you can do to lessen the possibility of your own transaction failing?
Problems With Mortgage Applications
Following an offer being accepted, many buyers will then begin to apply for their mortgage. You may have carried out a mortgage affordability check with your lender, but the actual application process is much more thorough, particularly if you’re a first-time buyer or are self-employed. If you do receive a mortgage offer, this will have an expiry date attached to it. If you fail to complete before the expiry date, then you’ll need to reapply or extend the offer which can take time and hold up your property chain.
Additionally, if your mortgage provider values your new property at a lower price than your agreed sale price, then this could cause the sale to collapse. To avoid this happening, make sure the property you’re buying is priced sensibly and on a par with similar properties in the area.
Surveys Uncovering Problems
If any buyer within your property chain instructs a surveyor, who finds a problem with the property they’re buying, this could impact on everyone else in the chain. Our Keystones Property Romford team explains that both buyer and seller may negotiate a different sale price, or agree for urgent work such as roof repairs to be carried out prior to the completion. However, if an agreement can’t be reached, then you might expect the chain to break down.
A backlog in conveyancing, as we’ve seen plenty of during Covid-19 can slow down momentum and cause a buyer to lose interest in the home buying process. Communication is key here, by keeping in touch with buyer and vendor solicitors and agents to ensure everyone is on the same page. Setting an early exchange date is a good idea too, so that the entire chain has a specific point to move towards, which keeps the pressure on.
Gazumping and Gazundering
As offers on a property aren’t legally binding, your vendor could accept a higher offer from another interested party, after having accepted yours. This is known as gazumping. Although this can be incredibly upsetting, remember that you have still sold your property at this point, and are therefore in a strong position to proceed with offering on another home.
Gazundering is different, where a home buyer waits until just before contracts are exchanged to lower their offer. This practice may be incredibly unfair but unfortunately, it’s entirely legal. To avoid this situation, make sure your home is priced realistically and make sure you work with a good agent who can handle a buyer pushing their luck.
Buying a home can be a stressful and uncertain time, which is why it’s essential to choose the right team of agents to support you and keep your move on track. Contact us today to book a viewing or a professional valuation with our team of experts.